TMI Blog2018 (3) TMI 189X X X X Extracts X X X X X X X X Extracts X X X X ..... the audit, it was found that the appellants were not paying service tax on Optional Extended Warranty Service under Motor Repair Related Service from 01.05.2011 to 30.06.2012. This service was in continuation to the normal warranty period of two years and was provided for third year or third or fourth year for which the appellants charged the separate fee from the ultimate customers. The Extended Warranty Policy was sold by them to their customers through their dealers. The dealers collected the amount for extended warranty from the customers on behalf of the appellants and remitted the same to the appellants after deducting their commission amount and service tax thereon. During the audit, it was also found that the appellants were providing Fleet Management Service under Business Support Services from 01.04.2007 to 30.06.2012. It was found that the appellants provided such services to corporate customers under the trade mark Maruti N2N, Complete Fleet Solutions in relation to vehicle manufactured by them. The appellants did not offer vehicles on lease to its corporate customers, but they engaged lease finance company as lessor for providing vehicles on lease. The corporate cus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r may not happen. Other argument was that the entry 65(105)(zzzza) did not cover their activity as it did not fall in the one of the purposes listed before 01.07.2012. He informed that post 01.07.2012, they were paying the service tax on this activity. He relied upon the following judgments:- (i) Digital Satellite Warranty Cover Ltd. Vs. Financial Service Authority - 2013 UK SC 7 (ii) CC Cus, Kerala Vs. M/s Larsen Tourbo Ltd 2015-TIOL-187-SC-ST (iii) Hindustan Engineering Vs. CST - 2017-TIOL-2166-CESTAT-DEL. (iv) Hindustan Aeronautics Ltd. Vs. CST - 2017-TIOL-3591-CESTAT-BANG. 3.2 On the second issue, Ld. Advocate contended that their role was to provide value added maintenance and repair service including periodic inspection, servicing, over-haul and repair and chauffer services. The appellant is discharging its service tax liability on the chauffer charges under the manpower supply service. He invited attention to the tripartite agreement, wherein the fleet management and fleet management charges were defined. Referring to the definition of Business Support Service ('BSS') , he claimed that the expression Infrastructural Support Serv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e for repair, reconditioning, restoration or decoration or similar services of any motor vehicle other than three-wheeled scooter auto rickshaw and motor vehicles meant for goods carriage. Relevant part of the extended warranty contract (EWC) is as below: TERMS AND CONDITIONS This is a mechanical and electrical breakdown warranty designed to assist towards the cost of repairs/replacement of any parts covered in this document We accept the responsibility of repair/replacement only as per the terms and conditions of this document. QUALIFICATION a) The Maruti vehicle must be delivered by Maruti authorized dealer and set up, serviced by Maruti authorized dealer/service station as per MUL recommended periodic maintenance schedule. b) The contract form with contract no. must be filed by the dealer and customer should retain the same. c) The extended warranty contract must have been registered with the dealer, and the dealer must have in turn registered with MUL. d) The Maruti vehicle must not be used for commercial purposes, including without limitation usage as taxi. e) The Maruti vehicle must be under warranty at the time of purchase of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act (Regulated Activities) Order 2001 of U.K. and is not in the context of the Finance Act, 1994. The law and jurisprudence of the two acts being different, the same cannot be relied on to interpret the provisions of the Finance Act, 1994. As for the other case laws cited by the appellants in support of their claim that it should be considered as work contract as mentioned above, as explained earlier, this contention is a mixed question of fact and law, which has to be examined in detail at the stage of final hearing. 6.5 The appellants have also pleaded on the issue of limitation. The issue is a debatable issue involving question of law and facts and would be examined at the stage of final regular hearing. However, we note that the major part of the demand in respect of Issue No. 1 is within the normal period of limitation. 6.6 In view of the foregoing, we hold that the appellants have not been able to make a prima facie case for waiver on this issue in their favour. Therefore, we direct to the appellants to deposit 10% of the service tax demanded on Issue No.1 within eight weeks subject to which the remaining amount of service tax, interest and penalty thereon will stand w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ervice, of business or commerce in section 65(104c) would get its colour from the inclusive portion of the definition. On this basis we are of prima facie view that the expression support service of business or commerce would cover only the services of supporting nature for the main business manufacture, trading or services - like services relating to marketing, customer relationship, distribution and logistics, accounting and transaction processing, office infrastructure, etc. and would not include service of renting of machinery and equipment for production or manufacture which being services relating to manufacturing activity are of altogether different nature. Accordingly, we hold that on Issue No.2, the appellants have made a prima facie case of waiver of the service tax demanded, interest and penalty thereon. 8. Appellants have not pleaded any financial difficulty. 9. In view of the foregoing, appellants are directed to make a pre-deposit of 10% of the service tax demanded on the Issue no.1 (Optional extended warranty service) within eight weeks. Subject to the appellants depositing the same, the remaining amount of service tax, interest and penalty will stand w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not liable to pay service tax under the category of 'Repair and Maintenance Services', as Id. Member (Technical) himself has observed that the dealers are paying service tax on the labour cost and for replacement of parts, they raised invoices on the appellant. 13. In view of the above observations, for the services rendered by the appellant of Optional Extended Warranty service, the appellant has made out a case for complete waiver of pre-deposit. Accordingly, I waive the requirement of pre-deposit of entire amount of service tax along with interest and penalty and stay recovery thereof during the pendency of appeal. As there are contrary views and difference of opinion between the Members, therefore, the matter be placed before the Hon'ble President to refer the matter to the third member to resolve the following issue :- POINTS OF DIFFERENCE (a) Whether the appellant is required to make the pre-deposit of 10% of service tax demand with respect to Optional Extended Warranty Service, as held by Member (Technical) that the appellant has not made out a prima-facie case for waiver of pre-deposit; or (b) Whether the Member (Judicial) is correct in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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